New Law Allows Corporations to be ‘Socially Responsible’ Rather Than Dedicated to Profit

A new law passed by the California state Assembly could, for the first time ever, make it legal for a corporation to put social responsibility before shareholder profits.

State law currently requires corporations to put financial interests first, and any corporation not doing so could face legal action from shareholders.

The bill, headed for the governor’s desk, would create a new class of corporation in California called “benefit corporations” that could pursue a material positive impact on society and the environment, while meeting higher standards of accountability and transparency.

The bill is modeled after successful legislation in Maryland, New Jersey, Vermont and Virginia.